Cyprus bank workers to strike over pension fears

April 4, 2013

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By AGENCE FRANCE PRESSE, A banner says: “Today our money, tomorrow our houses, the day after our country” at a rally in Nicosia/AFPNICOSIA, Apr 4 – Cyprus bank workers are to go on strike on Thursday over fears pensions may be at risk under the country’s crippling bailout, after the new finance minister vowed to do “whatever it takes” to right the economy.

Bank employees’ union ETYK called a two-hour stoppage over concerns that pension funds at Laiki and Bank of Cyprus are not being protected under the island’s 10-billion-euro ($12.8 billion) bailout deal with the International Monetary Fund, European Commission and European Central Bank.

The strike comes despite reassurances last week from President Nicos Anastasiades that every effort would be made to preserve pension funds at the two banks.

There has been no labour unrest in Cyprus so far, but the terms of the bailout will force the island to make painful reforms, raising taxes, downsizing the public-sector workforce, privatising some state-owned firms and drastically reducing the size of its bloated banking sector.

The country’s new Finance Minister Haris Georgiades vowed Wednesday to implement the bailout terms in full and warned of “difficult days ahead”.

“We… shall do whatever it takes to fix our public finances and put our economy back on track for growth,” he said after swearing in to his new post.

“Even though today’s circumstances might be bleak, the medium- and long-term prospects remain excellent. We have received a blow but I’m absolutely confident we shall overcome.”

Georgiades, 40, is a British-educated economist who had been serving as labour minister.

He takes over from Michalis Sarris, who announced Tuesday he was resigning to cooperate with a judicial probe into the causes of the crisis.

Sarris had been chairman last year of failed bank Laiki, the collapse of which was a major contributor to the crisis.

Cyprus is already in recession, with unemployment at around 15 percent and expected to grow sharply this year and next.

Forecasts before the deal was agreed saw GDP contracting by 3.5 percent this year.

The deal will see Cyprus receive a 10-billion-euro loan with an interest rate of between 2.5 and 2.7 percent, repayable over 12 years after a grace period of 10.

Under the final agreement, Cyprus won a two-year extension, from 2016 to 2018, to get its public finances in order.

It should get the first payment next month after the rescue is formally ratified, the European Commission said.

Banks have been operating under stringent capital controls since they reopened last Thursday, after a near two-week lockdown prompted by fears of a run on deposits.

The central bank has been progressively easing these restrictions, and has now raised the limit on business transactions from 5,000 euros to 25,000 and allowed people to write cheques of up to 9,000 euros.

But under the terms of the deal, those with savings larger than 100,000 euros in Bank of Cyprus, the country’s largest, face losing up to 60 percent of their deposits over that amount.

Those in second lender Laiki will have to wait years to see any of their money over 100,000 euros as the bank is shuttered.

Turkish President Abdullah Gul said Wednesday the crisis was a chance to work towards ending the dispute over the island — divided since 1974, when Turkish troops invaded and occupied its northern third in response to a Greek-engineered coup.

“The economic crisis should also be an important lesson to all of us because at the end of the day if the island were united then there would be a greater economic potential,” he said.

Turkey does not recognise the government of the Republic of Cyprus, which became an EU member in 2004 despite rejecting a United Nations peace plan in a referendum.

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